Question

The report disclosed that travelers who have run into huge hassles with airlines refusing to refund canceled flights, pocketing millions owed to consumers, and charging some fees even when they publicly announce they are waiving fees due to COVID-19. And some Airbnb landlords have denied refunds, even after the company said refunds would happen, because of a limited window when cancellations will be refunded. It has left many travelers out thousands of dollars for trips they will never reschedule. With the coronavirus crisis, airlines have imposed new policies that may violate federal rules.

So, The Transportation Department requires giving customers an option to take a full refund if the airline cancels a flight. Yet many airlines, U.S. carriers, as well as airlines flying to the U.S. covered by the same regulation, are offering only a voucher toward future travel. Why would the airlines think that such a policy could possibly work and what might their justification(s) be? Also, Nine U.S. senators recently sent letters to airline CEOs urging them to give customers full cash refunds for canceled flights “in light of the pressing need and unprecedented bailout” that the airline industry just got from Congress. Is this a reasonable request or an example of Congress “arm twisting” companies during an unprecedented financial crisis? Make points on both sides of the argument.

Answer 1

Airlines think that such policies might work because the pandemic is, effectively and in legal terms, 'act of God'. What it means is that its not their fault, and hence the issue cant be blamed on them. They didnt reschedule the flights out of their own issues and hence, shouldnt be forced to pay back the customers. On the other hand, they also think that they are pocketing the customer'smoney and are allowing the customers to get their travel, as promised, at any future date.

The 'armtwisting' that the government is trying to do has valid points on both sides.

On one hand, customers are out of the money they used to book tickets with. They may never have the need of another ticket on the same airline. For example, a person traveling to Fiji might never go there now. So his money is effetively stuck with a product he doesnt want to own and is not the product he wanted. So its only fair that rather than keeping the money in credit shells, the companies pay the customers back.

On the other hand, as mentioned earlier, this issue is effectively an act of God- that is, the airlines are not at fault here. They didnt cancel flights because of an issue they had. The cancellations and grounding has cost them huge amounts as only fuel costs have been saved but cost of staff, route money, airport usage costs, maintenance costs etc are still going on. At such a cash crunch time, to ask the companies to give cash back to the customers is very harsh on them and it will be tough for them.